Minnesota health plans at risk to lose $71.1M

MINNEAPOLIS (AP) — A federal government decision to freeze risk adjustment payments under the health care law is threatening more than $70 million in funding for Minnesota health insurers and raising questions about the potential impact on premiums next year.

The Centers for Medicare and Medicaid Services said Saturday it’ll hold the financial transfers, which shift money from some insurers with relatively healthy enrollees to insurers that happen to attract enrollees who use more medical care.

The agency attributes the move to a February court decision by the U.S. District Court for New Mexico that invalidated the use of the statewide average premium in the risk adjustment transfer formula established under the Affordable Care Act, the Star Tribune reported.

“The ruling prevents CMS from making further collections or payments under the risk adjustment program, including amounts for the 2017 benefit year, until the litigation is resolved,” CMS said in the statement.

But health policy experts said the agency could’ve responded to the ruling without freezing transfers. Insurers also said the move could result in higher rates for consumers.

“It’s ridiculous,” said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for insurers. “The timing, the impact, the uncertainty continue to make health care harder and more expensive for people than it needs to be.”

Risk adjustment is one of three provisions in the Affordable Care Act that were designed to promote competition in the insurance markets for individuals and small businesses. The adjustment has been used for years by the federal government in making payments to private insurers that operate Medicare health plans.

About 150,000 Minnesota residents this year are buying coverage in the individual market, which primarily serves people under age 65 who are self-employed or don’t get coverage from an employer. About 310,000 residents are covered by small employer health plans that cover 50 people or less.